Representative Meeks said the co-chairs would recommend four
study topics for adoption by the committee: 1) state role in workforce
training for citizens 55 and older, 2) transparency of quasi-governmental entities,
3) the impact on local taxes and the SEEK formula from private businesses
deeding property to local governments to qualify for tax free municipal bonds,
and 4) the effectiveness of putting pseudoephedrine behind the counter and the
Methcheck system in reducing illegal production of methamphetamine in Kentucky.
He summarized each topic. Upon motion made by Senator Schickel and seconded by
Representative Combs, the four study topics were approved by roll call vote.

Upon motion made by Senator Schickel and seconded by Representative
Combs, the minutes of the October 8, 2009 meeting were approved by voice vote,
without objection.

Upon motion made by Senator Schickel and seconded by Senator
McGaha, the minutes of the November 12, 2009 meeting were approved by voice
vote, without objection.

The Highly Skilled Educator Program Follow-up Report was
approved by roll call vote upon motion made by Senator Schickel and second by
Senator Smith.

Cindy Upton presented the report Cost of Incarcerating
Adult Felons. She said the focus of the report is the direct cost to the
state of incarcerating adult inmates in its custody. She said that some of the
recommendations call for the General Assembly to consider revising laws to
potentially reduce cost to the state, but this is not meant to imply that state
cost should be the only consideration.

She said in the 10-year period from Fiscal Year 2000 to
Fiscal Year 2009, the annual cost of corrections increased by more than 53
percent, from $294 million to almost $451 million. Even though the cost is
high, it compares favorably with other states. In FY 2007, the cost of
corrections was 2.4 percent of state spending, lower than or equal to the
percentage in all but 12 states.

Ms. Upton said in FY 2009, Kentucky had an average of 22,553
state inmates, of which 53.6 percent were housed in state prisons, 5.5 percent
were housed in contracted prisons, 33.8 percent were housed in local jails, 6.0
percent were housed in contracted halfway houses, and 1.1 percent were on home
incarceration. She said the department does not house out-of-state inmates and
it does not house Kentucky inmates in other states. The contracted Lee
Adjustment Center houses inmates from Vermont to fill beds not contracted to
the department. The state earns no money and incurs no cost for the inmates.

She said the number of inmates has increased by nearly 49
percent since FY 2000. The large number of inmates is due, in part, to an
increasing number of offenses defined as felonies, longer sentences for persons
defined as persistent felony offenders, and a 42 percent recidivism rate.

She said national studies have shown that the financial cost
of incarcerating nonviolent offenders is greater than the cost of
alternatives. As of June 30, 2009, the state had 9,430 inmates who had been
convicted of nonviolent property and drug offenses, some as persistent felony
offenders. They were 42 percent of all inmates. The estimated cost for FY 2009
to incarcerate them was $136.2 million. The estimated cost of community
supervision by probation and parole officers is $14.5 million, which includes
$5.5 million to hire, equip, and train new officers. Recommendation 1.1 is
that the General Assembly may wish to consider reducing the penalties for
nonviolent offenses and amending KRS 532.080 to apply the persistent felony
offender sentences only to persons convicted of violent offenses.

She said the U.S. Department of Justice has estimated that
61 percent of inmates in state prisons and 44 percent of inmates in local jails
have a mental health problem. About 75 percent of these inmates also met
criteria for substance dependence or abuse. She said that participants in drug
and mental health courts have lower recidivism rates than persons who receive
treatment as usual. Recommendation 1.2 is that the General Assembly may wish to
consider providing funding to expand the use of drug and mental health courts.

Ms. Upton said one-third of state inmates were housed in
local jails in FY 2009. The state is required to pay the county a per diem for
each state inmate after the person is sentenced. Before sentencing, the cost of
housing the inmates is borne by the counties, even though the inmates receive
credit for time served, and the state receives the benefit of the reduced
number of days it pays to house the inmates. Recommendation 2.1 is that the
General Assembly may wish to consider appropriating funds for the Department of
Corrections to pay counties a per diem for incarcerating persons who serve time
in local jails before being convicted of a felony offense.

Representative Meeks asked what the counties are spending to
incarcerate state inmates.

Ms. Upton said she did not know the exact amount spent by
counties, but the state pays the counties just under $32 per day.

Ms. Upton said statute requires the department to pay
inmates or their dependents for each day worked outside the prison, with
inmates having the greatest family dependency being given preference for
outside work assignments. She said the statute implies that inmate earnings
from outside work assignments should be used for family support, but no statute
or department policy requires the department to withhold money from inmate
earnings for family support. The department reported no family support
deductions.

She said statute requires the department to specify the
amount of compensation an inmate will earn for a governmental services program,
which by definition is performed outside the prison. She said no statute
requires that inmates be paid for work or educational assignments inside
correctional facilities. In FY 2009, state inmates were paid about $2.5
million for all assignments not associated with Kentucky Correctional
Industries. Recommendation 3.1 is that if it is the intent of the General
Assembly that inmates be paid for working or participating in program
assignments inside correctional facilities, the General Assembly may wish to
consider specifying in statute whether, to what extent, and for what purpose
deductions should be made from inmate earnings.

Ms. Upton said all 50 states operate correctional
industries, and most states compensate inmates for working in industries.
Kentucky inmates earned more than $802,000 from working in correctional
industries in FY 2009. She said some states withhold a portion of inmate
earnings for inmate savings, to reimburse the state for room and board, or to
pay court fines and restitution. Kentucky has no such requirement. Nationally,
about $7 million was deducted from inmate earnings in correctional industries
in FY 2008. Recommendation 3.2 is that if it is the intent of the General
Assembly that inmates working in Kentucky Correctional Industries be paid, the
General Assembly may wish to consider specifying in statute whether, to what
extent, and for what purpose deductions should be made from inmate earnings.

Ms. Upton said Kentucky’s correctional industries are not
keeping pace with those in other states. In FY 2008, Kentucky’s net sales were
$12.1 million; the national average was $34.9 million. She said a possible new
industry could be created if prison canteens were operated by Kentucky
Correctional Industries rather than being managed by prison wardens. The
department is required by statute to maintain a centralized canteen operation
that is self-supporting for all state and contracted prisons. She said all
profits must be used exclusively for the benefit of state inmates, but it is
not known if Kentucky Correctional Industries could operate a centralized
canteen at a lesser cost than the prisons and current vendors. Recommendation
3.3 is that the Department of Corrections should conduct a cost-benefit
analysis to determine the feasibility of operating prison canteens as a
correctional industry. If the results of the analysis are favorable, the
department should centralize the canteen operations under Kentucky Correctional
Industries.

Ms. Upton said the federal Prison Industry Enhancement
Certification Program encourages governments to develop meaningful employment
opportunities for inmates by partnering with private industries that need
labor. Requirements for certification include legislative approval, payment of
prevailing wages to inmates, and a guarantee that inmate employment will not
displace private-sector workers.

She said 37 states are certified; Kentucky is one of the 13
that are not. She said 28 certified states reported that inmates earned $40.3
million in gross wages in calendar year 2008. More than $15.5 million was
deducted from their earnings to pay room and board to offset the cost of
incarceration, to pay restitution to crime victims; to provide financial support
to families; and to pay local, state, and federal income taxes. More than $3
million was deducted for inmates’ savings to be used when they are released
from prison.

She said the program offers financial incentives to inmates.
It also allows inmates to gain employment experience and job skills that
increase the likelihood of getting a job when they are released. She said program
participants had lower recidivism rates than inmates who worked in traditional
prison industries or other correctional programs. Legislation authorizing the department
to operate the program had been introduced, but the bill did not pass. Recommendation
3.4 is that the General Assembly may wish to consider authorizing the
Department of Corrections to participate in the federal Prison Industry
Enhancement Certification Program.

Ms. Upton said state inmates can earn credits on their
sentences for good conduct, educational accomplishment, meritorious service,
and work on governmental services projects. The credits are deducted from the
maximum expiration date of an inmate’s sentence. She said in FY 2009, inmates
received more than 7.2 million days of credits. Legislation extending
sentence credits to treatment programs that require participation of 6 months
or more had been introduced, but the bill did not pass. Recommendation 3.5 is
that the General Assembly may wish to consider amending KRS 197.045(1) to award
sentence credits to inmates who successfully complete substance abuse programs
or other treatment programs that require participation of six months or more.

Ms. Upton said six programs in particular have been shown to
reduce recidivism by more than 10 percent. Kentucky uses all these programs.
They are cognitive-behavioral treatment in the community for low-risk sex
offenders on probation; intensive community supervision with a focus on
treatment; cognitive-behavioral treatment in prison for sex offenders;
vocational education in prison; drug treatment in the community for
drug-involved offenders; and adult drug courts. She said adult drug courts are
administered by the Administrative Office of the Courts and the other programs
currently are operated by the department. She said the department has recently
received federal grant awards to provide a reentry framework to train staff and
reduce recidivism rates.

She said the financial cost of incarceration should not be
the sole measure of how well a prison system is managed. A system may have
relatively low financial costs but be ineffective in ensuring the safety of the
public and inmates and staff. She said better data on performance could
provide critical information to managers of the system and to members of the
General Assembly as they make policy decisions about the system and funding. Recommendation
4.1 is that the Department of Corrections should identify meaningful
performance indicators, collect the needed data, and develop benchmarks for
prisons and the system. The information should be publicly available.

Senator Pendleton asked if Ms. Upton had any idea of the
percentage of people in county jails or state prisons for drug reasons. Ms.
Upton responded that about 30 percent were in state prisons.

Senator Pendleton said that he estimates that 75 to
80 percent of inmates in jail or prison are there for drug-related
reasons. He said that legislators need to do something to rehabilitate
prisoners and break the cycle. If prisoners can be put to work and send money
to their families, it will help the children.

Senator Schickel said he was pleased with the performance
measures mentioned in Recommendation 4.1. He asked if any states require their
inmates to work to generate revenue for the state beyond the cost of housing
the inmate. Ms. Upton said there are mostly cost offsets but few revenue-producing
activities in other states.

Representative Upchurch asked what the per diem was to the
counties and for private prisons. Ms. Upton said the per diem to county jails
was $31.34 and the lowest priced private prison was $35 per day.

Senator Seum asked if furniture is still being produced at
Eddyville. Mr. Robinson said they are producing furniture at other prisons but
not at Eddyville.

Senator Seum said he would like a list of what is being
produced statewide. Senator Schickel said that a list was available on the
Department of Corrections Web site.

Senator Seum asked if the state is mandated to use products
produced by prisoners. Ms. Upton said yes, unless it is not economically
feasible or does not meet a state need.

Senator Seum said that the state should be a great customer
of prison industries. Senator Pendleton said that there are several prison farms
across the state that did a great job providing produce and meat, but have
scaled back. He said there are some opportunities out there.

The Cost of Incarcerating Adult Felons report was approved
by roll call vote upon motion made by Representative Simpson and seconded by Representative
Upchurch.

Senator Smith asked the committee to keep the family of
Velma Childers in their thoughts. Representative Combs spoke of her experiences
with Ms. Childers and agreed that this would be a great loss.

Greg Hager presented the report Kentucky High School
Athletic Association. He said that the main concerns that led to the report
dealt with governance of the association; finances of the association,
particularly the cost of contracted legal services; and issues related to
eligibility of student athletes. Eligibility issues involved how long it took
for the association to make eligibility rulings and KHSAA’s policy that it
could penalize a school and its staff for following a court order “that was
determined improper” that allowed a student to play sports after the association
had declared the student ineligible. This meant in some cases that penalties
were imposed for students ultimately deemed eligible by the courts.

He said this study is unusual in that KHSAA acted to address
some concerns that led to the study before the study was completed. A follow-up
in the future will be necessary to make sure the actions are successful, but
they appear promising. Earlier this year, the Administrative Regulation Review
Subcommittee deferred approving an update of the regulation governing KHSAA
unless its court order policy was reconsidered. He said the association and
state board of education agreed to do so. According to the regulation, KHSAA
“shall…not punish or sanction, in any manner, a school, student, coach, or
administrator for allowing a student to play in an athletic contest or practice
with the team during a time when an order of a court of competent jurisdiction
permits the student to participate or otherwise stays or enjoins enforcement of
a KHSAA final decision on eligibility.”

He said the association also revised the student eligibility
decision appeal process this year. Preliminary information is that this reduces
the time taken for appeal cases by weeks. KHSAA also hired an in-house counsel
this year. Unless the association’s need for legal services increases, this
should reduce expenses for contracted legal services.

Representative Meeks asked if there was detailed expenditure
information for contracted legal expenses. Mr. Hager said that staff did not
have that information but that KHSAA may be able to provide it.

Mr. Hager said KHSAA is a nonprofit, independent agency.
Kentucky is typical of other states in that the state, in Kentucky’s case
through the Board of Education, designates an agency to manage high school
interscholastic sports. KHSAA is typical in terms of how it is governed, its
number of staff, its major sources of revenue, and its bylaws related to student
athlete eligibility.

He said the members of KHSAA are high schools. KHSAA has 279
member schools: 232 public, 45 private, and 2 federal. Annual dues depend on
the size of the school, ranging from $800 to $1,400.

He said KHSAA is governed through a constitution and 33
bylaws. Subjects covered by the constitution include the duties of the
commissioner, membership and duties of the Board of Control, school membership
requirements, management of dues and revenues, and procedures for amending
bylaws. Topics covered by the bylaws include eligibility; duties of school
officials; rules and regulations governing contests; requirements and
regulations for coaches, schools, and officials; and imposition of penalties. Oversight
is the responsibility of the Kentucky Board of Education, to which KHSAA
reports regularly. KHSAA has 15 staff, who include the commissioner and four
assistant commissioners.

Mr. Hager said KHSAA is a nonprofit. In some years, expenses
have been greater than revenue. In FY 2009, revenue was greater than expenses
and totaled just over $4 million. He said 70 percent of revenue, $2.85
million, was from playoff receipts from state championships in KHSAA-sanctioned
sports; the bulk of which was from the boys basketball tournament, totaling $1.8
million or 44 percent of total revenue. Thirteen percent of revenue
was from KHSAA’s corporate partners, 9 percent from school dues, and 5 percent
from fees collected from officials.

Mr. Hager said 31 percent of FY 2009 expenses relate to
provision of sports playoffs. About half of the expenses are for administration,
personnel and all other administrative costs. More than 6 percent is for
insurance. The association purchases catastrophic insurance for students, which
cost $168,000 in FY 2009. Expenses related to services for corporate partners
were about 5 percent of expenses.

He said the largest item in the “other administration”
category is payment for contracted legal services, which totaled to $2 million
from FY 2002 to FY 2009, 7.3 percent of expenses over this period.
Contracted legal work was done by Greenebaum, Doll, and McDonald, except for
protection of intellectual property.

Mr. Hager said 13 of 33 bylaws cover athletic eligibility.
Most eligibility cases involve students transferring schools. Bylaw 6 covers
domestic students; Bylaw 7 covers foreign exchange students. Under both bylaws,
students who transfer schools are ineligible for 1 year unless the student
meets specified exceptions. He said there are several exceptions in Bylaw 6
such as parents legally divorcing and a student’s legal custodial guardian
changing by court order.

He said there are at least 12 specified exceptions used by
other states not found in KHSAA’s Bylaw 6. KHSAA has discretion to waive the transfer
rule for reasons in addition to those specified, but it would be clearer to
students, parents, and schools if as many of the reasons as possible could be
specified in writing. Recommendation 2.1 is that KHSAA should consider
expanding the exceptions to Bylaw 6 based on a review of specific exceptions
allowed by other states.

Mr. Hager said a paper form is used to process eligibility
decisions. The process begins with the student’s new school, called the
receiving school. If the student’s previous school, called the sending school,
verifies that the student did not previously participate in varsity sports and
the student is otherwise eligible, then the student is immediately eligible and
KHSAA need not make a ruling. Otherwise, both schools are responsible for
completing their sections of the form. He said that if the sections are done in
specified sequence, the form could be sent back and forth up to five times
before the form is submitted to KHSAA. In practice, the form goes from the receiving
school to the sending school back to the receiving school, which sends it to
KHSAA.

Representative Meeks asked how many transfer cases there
are. Mr. Hager said that there were nearly 2,500 in the last 3 years.

Mr. Hager said each state has at least one process for
students, or schools on behalf of students, to appeal eligibility decisions.
There are at least 19 due process arrangements among state activity
associations. KHSAA’s current process, which began in July 2009, appears to be
unique. He said the initial eligibility decision is made by ruling officers,
who are KHSAA assistant commissioners. A student who is ruled ineligible may
appeal. A hearing is conducted by one of two hearing officers at the KHSAA office
in Lexington. Parties to the case may have attorneys present. The hearing
officer forwards findings of fact and recommendation to the commissioner.
Before making a final decision, the commissioner may allow additional
information to be submitted. This process was changed to reduce the time taken
for appeal cases.

He said, in the previous process, a case would go from the commissioner’s
office to the hearing officer and then to the Board of Control. Because the
Board of Control considered cases at its monthly meetings, it could take
several weeks for appeals cases to be decided. He said Program Review staff analyzed
transfer cases occurring over the past 3 years to determine how long it took
for different stages of the process and what decisions were made. Because the
current appeals process is new, almost all analyses are based on the previous
process. Average time for an appeal, once it was filed, was 33 days under the previous
system, and 17 days under the current system based on preliminary data.

Mr. Hager said nearly 2,500 hundred domestic and foreign
students sought eligibility rulings to play sports at KHSAA member schools over
the past 3 years, an average of 766 cases per year. Twenty-eight percent
were foreign exchange students and 20 percent were domestic students
transferring from schools in other states. More than 90 percent of the
students transferred to public high schools. On average, more than 200 cases
are received in August and nearly half the cases for the year are received in
July and August.

Mr. Hager said Program Review staff reviewed the paper
domestic student transfer forms (Bylaw 6) submitted to KHSAA over the past 3
years. There were more than 1,600 cases in which signature dates and date-received
stamps allowed staff to tell how long each step of the eligibility process
took. He said within a week after the case was initiated, the commissioner’s
office had ruled on 10 percent of the cases; 32 percent were awaiting
the sending school’s signature; 46 percent were signed by the sending
school but not yet mailed to KHSAA; and 11 percent had arrived at KHSAA
but no decision had yet been made. Once KHSAA received the transfer forms, the
association took 1 week or less to make an eligibility ruling in
73 percent of cases. In nearly 50 percent of the cases, however, the
association did not receive the required forms within 2 weeks of the student’s
new school initiating the transfer process. Thirty percent of the forms
were not received within 3 weeks; 20 percent were not received within 4
weeks.

He said that the time before KHSAA receives the transfer
form could be decreased if parents were informed earlier about KHSAA’s transfer
rule, the circumstances under which a rule can be waived, and what documents are
needed to justify waiving the transfer rule under each circumstance. This
information is on the transfer form, but staff interviews with athletic
directors indicate that there are no guarantee parents or students will have
met with the athletic director and seen the form immediately after enrollment.
Recommendation 2.2 is that KHSAA should consider creating a document that
provides a concise explanation of the association’s transfer rule that details
the various circumstances under which the transfer rule can be waived, and that
describes the supporting documentation that KHSAA would need to justify waiving
the rule under each circumstance. The document should also encourage any
student wishing to participate in sports to contact the athletic director at
the student’s new school immediately. This document should be made available by
the school to the student’s parents at the time the student is enrolled in the
new school.

Mr. Hager said a student’s ability to play sports the same
year he or she transfers ultimately depends on KHSAA’s eligibility
ruling—whether the student is ruled eligible. However, it also depends on when
KHSAA makes its initial ruling, or if the case is appealed, and when the
association makes its final decision. Depending on the sport a student wants to
play, it is possible that the association could declare a student eligible to
play too late in the season for the student to participate.

He said that over the past 3 years more than 500 eligibility
requests were initiated in July and August for students who wanted to play fall
sports. KHSAA prioritizes such cases, processing them more quickly. The main
problem is for students who appeal the initial decision. The new appeals
process appears to be faster, which should help. He said that in the past KHSAA
sent a letter stating the initial eligibility ruling to the principals of the
sending and receiving schools. As of November 2009, KHSAA also mails a copy to
the student’s current address. This may speed up the filing of an appeal.

He said a hypothetical example illustrates the need for
continued improvement. If the receiving school initiated the request for an
eligibility ruling on July 1, 2009, in 75 percent of cases KHSAA would
have made the initial ruling by July 29. By this date, practice had already
started for four sports. If a student who was initially ruled ineligible
appealed immediately, the commissioner would have issued a final ruling by
August 21 based on the average decision time under the new appeal process. This
is a notable improvement over the previous process, but by August 21 the
regular season had started for all five fall sports.

Mr. Hager said staff analyzed 1,798 domestic transfer cases occurring
over the past 3 years. The commissioner ruled 66 percent immediately
eligible to play sports. Mr. Hager said 42 percent of students initially
ruled ineligible appealed. Of those, 40 percent were ruled eligible by the
Board of Control. Ultimately, 71 percent of students seeking eligibility
under Bylaw 6 were ruled eligible. Since ineligible students cannot play or
practice, those students who appeal may miss part or all of a sport season
while waiting for the Board of Control to issue a final ruling. Staff analyzed
decisions to see if there were differences based on whether the student was
transferring to a private or public school, what sports the student wished to
play, and the region in which the student’s new school was located. He also summarized
the results for regions. The percentage of students ruled eligible did vary by
region. At least 80 percent were ruled eligible in four regions; less than
60 percent were ruled eligible in two regions.

Mr. Hager said, for this report, Program Review staff
reviewed the paper transfer forms for domestic students from the past 3 years.
This is time-intensive and would not be feasible for KHSAA to do with the
current number of staff. He said moving to an electronic system would mean cases
could be coded by criteria of interest to the Board of Control. For example, it
could quickly be determined whether decisions differed by sport. Another
benefit is that eligibility cases would reach KHSAA sooner. Recommendation 2.3
is that KHSAA should consider creating an electronic system for processing the
forms and other information required to determine the eligibility of student
athletes.

Senator Stine asked for the corporate partners. Mr. Hager
said KHSAA would have the information.

Senator Stine asked what ethical code guides KHSAA and its
dealings with corporate partners. Ms. Myatt said KHSAA has a code of ethics and
a conflict of interest statement in its operating procedure manual.

Senator Stine asked if the expenditures on physical plant
and equipment listed in the report included automobiles. Mr. Hager said it
includes their building and computers but does not include automobiles.

Senator Stine asked how many automobiles they have. Mr.
Hager said KHSAA has five.

Senator Stine asked who audits their accounts. Mr. Hager
said that Stivers and Associates is the auditor.

Senator Stine asked about regional investigative committees
mentioned in the report. She asked if committee members would be involved in
eligibility decisions about students at competing schools. Ms. Myatt said that they
are not decision makers and would not be making recommendations if there was a
conflict of interest.

Senator Stine asked if commissioners have any relationship
to any school. Mr. Hager said no.

Representative Simpson asked if school districts can be
assessed for the association’s legal fees in eligibility cases. Mr. Hager said
yes unless the school can prove it was not involved in the case.

Representative Simpson asked if KHSAA made the new changes willingly
or at the insistence of the Administrative Regulations Review Subcommittee. Mr.
Hager said he did not know what the association planned to do but his
impression from attending a subcommittee meeting was that the changes were made
at the insistence of the subcommittee.

Brigid DeVries, Commissioner, and Julian Tackett, Assistant
Commissioner, from KHSAA responded to the report. Ms. DeVries said that they
concur with the recommendations and look forward to implementing them.

Senator Pendleton said that he had not received a response
to a letter he sent to KHSAA. He asked who has oversight as to where the
football playoff games are played. Mr. Tackett said the home school determines
where the game is played. In the case referred to by Senator Pendleton, the
home school’s stadium was not adequate and the school chose a stadium in
Tennessee.

Senator Pendleton said that Kentucky schools should not be
providing economic benefits to another state by playing in Tennessee. He wanted
to see details on the finances. Mr. Tackett said that he would provide the financial
information when it became available. He said he would relay Senator
Pendleton’s concerns.

Senator Stine asked who the corporate sponsors are. Mr.
Tackett said PNC Bank sponsored the boys basketball tournament. Houchens
Industries and various smaller partners are also partners. He said they try to
have sponsors for all events.

Senator Stine asked how often and by whom is KHSAA audited. Mr.
Tackett said they are audited every year. He said they were previously audited
by Miller, Mayer, Sullivan, and Stevens but switched this year to Stivers and
Associates. The audit is expected to be completed in January 2010. He said the
last five audits were on their Web site.

Senator Stine asked if employees of the association belong
to the state retirement system. Mr. Tackett said employees with college degrees
are in the Kentucky Teachers’ Retirement System. Others are in the Kentucky
Retirement Systems.

Senator Stine said that in the Mitchell case, the school and
coach were penalized even though the student was eligible to play sports according
to the courts after prolonged litigation. The high school was fined $1,500 and
the coach was suspended for two games. This was done before litigation was
complete. She asked if restitution had been made to the school. Ms. DeVries
said there was not an appeal by the school and coach, so no restitution has
been made.

Senator Stine said that an injustice had been done that has
not been addressed. She said that Bylaw 33, which allows for the association to
require schools to pay its legal fees in some cases, has a chilling effect. She
asked if they would consider removing this from the bylaws. Mr. Tackett said
this bylaw was initiated by the schools. They will discuss the removal of the
bylaw at the January board meeting.

Representative Simpson asked how KHSAA decides whether to
seek reimbursement and how much to collect. Ms. DeVries said there has been no
reimbursement of legal fees in the past 3 years.

Representative Simpson asked if the association would
support legislation to make the requirements of the federal decree regarding
composition of the board of control part of Kentucky law. Mr. Tackett said the
board would be amenable to this.

Representative Upchurch asked how frequently they had
changed auditors prior to this year. Mr. Tackett said they had used the same
auditor every year but changed the lead staff each year. He said they will now
be changing auditors every 3 to 5 years.

Representative Upchurch asked if there is any reason the
state auditor does not audit KHSAA. Mr. Tackett said no one had asked for such
an audit.

Representative Meeks asked what KHSAA spends on audits. Mr.
Tackett said they spent $18,000 on audits this year.

Senator Stine asked if the Program Review and Investigations
Committee can make a recommendation for KHSAA to be audited regularly by the
state auditor. Representative Meeks said yes.

Representative Simpson made a motion that the Program Review
and Investigations Committee make a recommendation that the state auditor audit
KHSAA regularly. Senator Stine seconded the motion, which was approved by voice
vote.

The Kentucky High School Athletic Association report
was approved by roll call vote upon motion made by Representative Simpson and
seconded by Representative Combs.

Van Knowles presented the report School Health Services
for Students With Chronic Health Conditions in Kentucky. He said this
report examines the efforts schools make to ensure that students with diabetes,
asthma, severe allergy, and epilepsy are able to participate in school safely
and to learn while there. All these conditions are chronic and have potentially
life-threatening complications; most require some kind of regular care during
school hours.

He said the report has eight major conclusions. 1) Most
school personnel and school nurses appear motivated to provide the best
possible care for all students. 2) In many schools, health services staffing
is inadequate. Some parents and school staff members have reported
inappropriate care or inappropriate limitations on care for students with
chronic health conditions. 3) Multiple federal and state laws and regulations
govern school health services and leave many open questions about what services
schools are obligated to provide and how they should provide them. School
districts do not fully understand their obligations and the requirements for
providing health services. 4) The Kentucky Department of Education (KDE), while
providing some guidance and technical assistance, does not exercise oversight
of school health services and does not utilize its student information system
effectively to track health services. Other agencies regulate aspects of school
health but do not actively monitor services. Coordination has been limited but
has improved. 5) Local health departments employ more school nurses than school
districts do. Coordination with school districts is good in many cases, but
sometimes health departments and schools disagree on the services needed. 6)
Unlicensed school staff supplement nurses in many school districts in Kentucky
and across the country. There is disagreement even within the medical and nursing
professions on the extent that unlicensed staff should provide care. 7) Many
districts cite funding limitations as a reason for limited health services, but
some districts in relatively impoverished counties have exemplary health
services. 8) Medicaid has become a crucial funding source for school health
services because most health departments can bill Medicaid for school health
services and school districts cannot. However, health departments in the
16-county Passport managed care region cannot bill Medicaid.

He said the reported number of students known to have asthma
and epilepsy are significantly below the expected numbers, possibly because
many students with those conditions are able to manage their symptoms without
informing the schools. The reported number for severe allergy overstates the
number with truly life-threatening allergy, but schools have to assume that
anyone who might have such an allergy actually does.

Mr. Knowles said multiple federal and state laws and
regulations govern levels of care that schools must consider. 1) The
Individuals with Disabilities Education Act establishes the rules for
determining the services needed for students with significant disabilities
affecting their ability to learn, including health services for conditions that
contribute to the education difficulty. 2) Most students with chronic health
conditions would be considered to have a less severe disability under
Section 504 of the Rehabilitation Act of 1973, which requires schools to
determine what accommodations are needed to ensure participation in school and
related activities. 3) Some students with chronic health conditions might not
be considered to have a disability, but might still need health services during
school and school activities; they are covered by KRS 156.502 and other
Kentucky statutes.

He said federal disability laws leave many open questions
about what services schools are obligated to provide and how they should
provide them. Kentucky has resolved some open questions but some federal
ambiguities remain and some issues have arisen with Kentucky’s laws.
Recommendation 2.1 is that the General Assembly may wish to consider
establishing or clarifying school health policy in the following areas, within
the limits of federal disability laws: 1) minimum staffing requirements for
school health services; 2) the meaning of “any necessary arrangement” in KRS
156.502; 3) whether districts must provide health services at all
school-related programs and activities; 4) whether districts must provide
health services in the school a student would ordinarily attend; 5) how
districts should provide for students with prescriptions for emergency
medications not mentioned in statute; 6) how districts should provide for
students with prescriptions for new treatments not mentioned in statute; 7) how
districts should respond to parent and physician requests for students to carry
and self-administer medications not mentioned in statute; 8) the discretion
districts should have when students with permission to carry medications misuse
them; 9) whether there should be a written individual health care plan for all
students needing routine or emergency care; 10) provision to protect physicians
who agree to be district medical directors; and 11) the role parents and their
designees, including school employees, may have in providing health services to
their children in school.

Mr. Knowles said KRS 156.502 states that school health
services shall be provided by physicians or nurses or unlicensed people they
delegate. The overwhelming number of licensed health professionals in school
districts are registered nurses and that is what the report focuses on.

He said local health departments employ a greater portion of
school nurses than school districts do. Coordination with school districts is
good in many cases, but sometimes health departments and schools disagree on
the services needed. The Department for Public Health allows health departments
to provide direct school health services but requires the health departments to
accept full liability for those services. In addition, sharing of student
health information between health departments and school districts is
restricted based on a concern with federal health privacy law. Recommendation
3.1 is that the Department for Public Health should advise local health
departments on ways to meet school district needs with a reasonable liability
risk and to share health information with the schools as needed. If necessary,
the department should request that the General Assembly grant liability
protection so that health departments may better serve school health needs.

Mr. Knowles said KDE has not adequately monitored agreements
between school districts and health departments and other contracted providers.
Recommendation 3.2 is that the department should require school district
agreements with outside health service providers to be in writing. Agreements
should describe the responsibilities of both parties and be submitted to the
department.

He said staff identified several different models for
delivering school health services. Many of the models involved nurses from more
than one employer. Of the 168 school districts responding to information
requests, 49 indicated having nurses from more than one employer, usually
including the district itself. Of those, 42 indicated shared
responsibility for supervision between the school district and the other
employer.

He said most school districts also used trained, unlicensed
school personnel to assist nurses. Some districts struggled to have an
effective model that meets all the requirements of school health services.

Mr. Knowles said several school districts reported depending
on parents to provide care to their children at school and especially on field
trips. In some schools, parents recruited and trained school staff to provide
care for their children, a practice that might be illegal. He said districts
may not require a parent to perform health service tasks and may not deny
attendance and participation because of a lack of health services.

He said some school districts do not fully understand their
obligations and the requirements for providing health services, and some appear
not to be meeting the minimal requirements. Recommendation 3.3 is that KDE
should require all school districts to submit descriptions of their school
health services models, policies, and procedures and to update them on a
regular basis. The descriptions should be adequate to determine whether
districts meet minimum requirements for providing health services. The
department should include guidance to districts on these requirements. If
necessary, the Kentucky Board of Education should promulgate regulations to
authorize such reporting.

Mr. Knowles said that Program Review staff identified 31
issues, including some of the issues listed in Recommendation 2.1, which KDE
and the other agencies might resolve. Because most of these issues involve
nursing and medical practice, staff did not propose specific resolutions.
Rather, staff recommended that the agencies work together on a comprehensive
solution.

He said some of the issues concerning Unlicensed Assistive
Personnel (UAP) under KRS 156.502 that need clarification are that 1) UAPs must
be properly trained and demonstrate competency to perform each task; 2) UAPs
must be delegated and supervised by a nurse or physician; 3) UAPs must be
assigned to specific students; and 4) most school personnel may refuse to be
UAPs, unless it is part of their contract or job description. He said nursing
regulations and guidelines require a nurse to evaluate each student and
determine whether it is prudent to delegate health service tasks. He said KDE
does not monitor the procedures used by districts to delegate and supervise
UAPs.

He said issues regarding delegation of insulin need
clarification. There is agreement that nurses are the best choice to
administer insulin. There is disagreement on whether UAPs should administer
insulin when nurses cannot. Practicing physicians and advocates argued that
UAPs can do it as well as parents can. Care for some students with diabetes is
complex and difficult even for parents; it would be unwise to delegate for such
students.

Mr. Knowles said questionable health service practices have
been reported by parents and school staff. Some of these gaps and lapses in
care indicate occasional violations of state or federal requirements. For example,
schools may not always have someone present to administer emergency medication
for a student with diabetes or epilepsy as required by Kentucky statute. In
some instances, students with high or low blood sugar were sent to the office
alone to receive care. Some schools prohibit students from carrying asthma
inhalers despite the statutory procedure to allow it. Some schools do not
allow students with diabetes to attend school unless a parent can come to
administer insulin.

He said several agencies have oversight authority over
aspects of school health services, but the agencies do not actively monitor the
way school health services are provided. He said the Kentucky Board of
Education and KDE have the primary responsibility and should take the lead in
regulating and overseeing school health services. The department, while
providing some guidance and technical assistance, has not assigned adequate
resources to school health, does not monitor or exercise oversight of school
health services, and does not utilize its student information system effectively
to track health services. Recommendation 3.4 is that the Kentucky Board of
Education and KDE should take the lead to ensure compliance with current and
future statutes and regulations. They and the Kentucky Department for Public
Health, Board of Nursing, and Board of Medical Licensure, in consultation with
other stakeholders, should collectively review the issues identified in this
report. Using their respective authorities, they should develop comprehensive
school health regulations, advisory opinions, and advice for school districts,
health departments, nurses, and physicians. These should be mutually
consistent, should address statutory ambiguities, and should establish minimum
requirements for school health services, with flexibility for justifiable
variations among districts. If statutory changes would be helpful, the agencies
should propose such changes to the General Assembly.

Mr. Knowles said many districts cite funding limitations as
a reason for limited health services, but some districts in relatively
impoverished counties have exemplary health services, often in cooperation with
health departments. Most school districts pay for their health services out of
the general fund, which consists primarily of local tax funds and state education
funds. Other sources include Medicaid, federal disability funds, and grants.

He said because of federal disability laws and the Medicaid
“free care rule,” schools may not bill Medicaid or most insurers for students.
Health departments may bill Medicaid because of a federal exemption for
recipients of Maternal and Child Health (Title V) funds, even though most other
insurers do not cover their nursing services. As a result, health departments
have taken on a greater role, growing by 31 percent between FY 2008 and FY
2009.

Mr. Knowles said private insurance might be another source
of revenue for school health if it would cover nurses who are not under direct
supervision of a physician. School health providers also would be able to bill
for students with disabilities if families did not have to pay out of pocket.
Recommendation 4.1 is that the General Assembly may wish to consider whether to
require private insurers to cover school health services provided by registered
nurses and licensed practical nurses. It also may wish to consider ways to
permit school health providers to receive reimbursement without requiring
families to pay out of pocket, so that the providers may bill for services to
students with disabilities.

Mr. Knowles said that although Medicaid covers school health
services in other parts of the state, the Passport Medicaid managed care
organization does not. The Passport region includes Jefferson County and 15
nearby counties.

He said Program Review staff found that the number of
schools per nurse and number of students per nurse inside the Passport region
were at least twice as high as outside the Passport region. Staff also noted
that school districts’ own expenditures per pupil were higher in the Passport
region than in any other region. He said payment for school health services
would have to come from existing programs. He said Passport, Medicaid, the
Department for Public Health, and health departments have held discussions.
Passport has proposed partial coverage, but so far no agreement has been
reached. Recommendation 4.2 is that the Department for Medicaid Services,
Department for Public Health, local health departments, and University Health
Care, Inc., should continue to seek an equitable method to cover school health
services for students enrolled in Medicaid in the Passport region. If they are
unable to reach an agreement, the General Assembly may wish to consider whether
it can establish a solution within or outside of the Medicaid managed care
waiver.

Mr. Knowles concluded that districts may look at options for
providing adequate care at the lowest cost, including use of UAPs and sharing
costs with health departments. He said some states, such as Virginia,
Tennessee, and Georgia provide additional funding for school nurses. South
Carolina uses some Title V funds to allow school districts to bill Medicaid. He
said Medicaid and some insurers do not cover a second prescription for
medication or equipment needed at school.

Representative Butler complimented the report and pointed out
the needs for school health services. He said he was surprised at the low
number of school nurses per school in the Passport region in comparison to the
rest of the state. He asked about the training of non-certified personnel. Mr.
Knowles said those who had been trained had a fairly high willingness to
continue, and nurses said the training was adequate.

Representative Butler asked about the use of emergency
medical technicians (EMTs) to provide services. Mr. Knowles said staff did not learn
of any districts using EMTs but several were using certified medical
assistants.

Representative Butler said the questionable practices
identified in the report are unacceptable; for example, sending students with
high or low blood sugar to the office alone. He said an informational campaign
is needed. Kay Kennedy, Director of the Division of District Operations, Kentucky
Department of Education, said a written response to the report had been
provided.

Representative Meeks asked about the cost of implementing
the recommendations, including how many additional staff would be needed. Ms. Erwin
said she would provide this information.

Sandi Clark, Pediatric and School Nurse Consultant, Department
of Public Health, responded to the report. She said that public health departments
are required to provide mandated services. School health is an option health
departments may provide if all local mandated services have been met.
Therefore, some health departments can provide school health services and
others cannot. She said that when a health department is in the school
building, it is considered a satellite and may bill just as if it were in the
health department. She summarized recent training efforts by the department,
including a contract with the University of Louisville to provide a workshop
for school nurses.

Representative Simpson asked about attendance at the
workshop. Ms. Clark said 89 attended this year. In the previous year, there
were more than 100 in attendance.

Representative Meeks asked if the training is moved around
the state. Ms. Clark said it is not due to the contract with the University of
Louisville, but that online training is available.

Representative Meeks asked how many nurses would be needed
to put a nurse in every school. Ms. Erwin said most states focus on elementary
and middle schools, and she can get that number for him.

Representative Meeks asked for models used in other states. Nathan
Goldman, General Counsel for the Kentucky Board of Nursing, read a written
statement. He said the board put together its own task force to study the
issue of health care for school children. He said one of the outcomes of that
group is the development of a training program that will provide a consistent,
standardized training on medication administration by unlicensed personnel. He
said the Board of Nursing would work with KDE, the Department of Public Health,
and any other interested agency or party to find solutions to these issues to
insure that school children receive high quality health care.

Sharon Mercer, Practice Consultant for the Kentucky Board of
Nursing, said only nurses or physicians can delegate medical duties according
to statute. EMTs cannot dictate to other employees.

Representative Butler clarified that EMTs could be on the
staff and be designated by a nurse or physician. Ms. Mercer said she was
surprised that not all schools had someone to do emergency medications. She was
pleased with the recommendation to pull departments together to decide on these
issues.

Stewart Perry, former chair of the board of the American
Diabetes Association, read a written statement. He said the association
supports administration of medication by trained, nonmedical personnel. He said
there should be a comprehensive policy for all the problems with diabetes in a
school setting.

Debbie McGrath, Executive Director of the Epilepsy
Foundation Kentuckiana, said that the number of students with epilepsy in the
report is too low. She said her organization provides school nurse training for
epilepsy and seizure disorders. She said the department needs more than one
nurse to deal with all the issues such as diabetes and epilepsy. She said
medication can be administered by nonmedical people who are trained. She wants
to work with other groups across the board to train unlicensed people to
administer various medications.

Representative Meeks asked if there are models for training.
Ms. McGrath said yes. She said Kentucky was the first state to make a law that
Diastat may be administered by unlicensed personnel.